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October 31, 2013 at 6:00 AM

Poll: Time to strip the NFL of its nonprofit status?

Are we so blinded by our love of sports that we’re willing to be fleeced by the most profitable sports league in the world and its billionaire team owners?

The Seattle Seahawks defeat the Tennessee Titans 20-13 Sunday October 13, 2013 at CenturyLink Field in Seattle (BETTINA HANSEN/THE SEATTLE TIMES)

The Seattle Seahawks defeat the Tennessee Titans 20-13 Sunday October 13, 2013 at CenturyLink Field in Seattle. (Bettina Hansen/The Seattle Times)

I couldn’t make it past the first graph of this recent Atlantic magazine story, an excerpt from Gregg Easterbrook‘s book “The King of Sports,” without fuming.

In Virginia, Republican Governor Bob McDonnell, who styles himself as a budget-slashing conservative crusader, took $4 million from taxpayers’ pockets and handed the money to the Washington Redskins, for the team to upgrade a workout facility. Hoping to avoid scrutiny, McDonnell approved the gift while the state legislature was out of session. The Redskins’ owner, Dan Snyder, has a net worth estimated by Forbes at $1 billion. But even billionaires like to receive expensive gifts.

Throughout the report, Easterbrook provides an exhaustive look at how American taxpayers have financed “70 percent of the capital cost of  NFL stadiums,” in addition to many ongoing infrastructure and operating costs. Here’s a tidbit about the Seattle Seahawks:

CenturyLink Field, where the Seattle Seahawks play, opened in 2002, with Washington State taxpayers providing $390 million of the $560 million construction cost. The Seahawks, owned by Paul Allen, one of the richest people in the world, pay the state about $1 million annually in rent in return for most of the revenue from ticket sales, concessions, parking, and broadcasting (all told, perhaps $200 million a year).

The Seahawks are a great team, but this is just plain wrong, especially when we’re struggling to fully fund public education and to sustain the cost of essential services such as the Metro transit system and health care.

Here’s the kicker: The National Football League is tax exempt. To the IRS, the NFL has been known as the Nonprofit Football League for decades. NBC News reports it gets away with this by only claiming tax immunity for the main office, which operated in 2011 with about $255 million worth of revenue. The NFL’s main function is to distribute billions generated from licensing and television deals to its 32 for-profit teams, each worth on average $1.2 billion according to this Forbes report. Still doesn’t pass the smell test. How many trade or charitable organizations pay their top official (in this case NFL Commissioner Roger Goodell) nearly $30 million?

In the 1960s, Congress didn’t just give the NFL special status in the tax code. It also gave the league sole ownership of broadcast rights, which Sports Illustrated reports is worth $4 billion this year. Think about it: games are played in public venues and the Seahawks web site shows average spectators pay $55 to $400 to see a single game, yet the profits are split among mega-rich private owners.

Easterbrook is right: Congress should find the courage to revoke the NFL’s tax-exempt status and “require that television images created in publicly funded sports facilities cannot be privatized.” Rules worked out in smoke-filled rooms a half-century ago no longer apply. Government policies created an environment for the NFL to generate nearly $10 billion a year in revenue. Its owners can afford to give more back to the people who build their stadiums and pay top dollar to attend their games. Here is one more excerpt from the Atlantic article:

If football images created in places funded by taxpayers became public domain, the league would respond by paying the true cost of future stadiums — while negotiating to repay construction subsidies already received. To do otherwise would mean the loss of billions in television-rights fees. Pro football would remain just as exciting and popular, but would no longer take advantage of average people.

Bloomberg Businessweek reports U.S. Sen. Tom Coburn, R-Okla., introduced legislation in September to strip the NFL of its nonprofit status, but it faces stiff political resistance. Really, what’s the big deal? In contrast, the National Basketball Association is for-profit; Major League Baseball gave up its tax exemptions in 2007.

What do you think? Here’s a poll:

Comments | Topics: congress, football, NFL


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